Reading an IMF blog post causes a certain amount of anxiety, not because economists are alarmists but rather because they are typically not. When they try to say things like “all roads lead to higher prices and slower growth,” it’s worth stopping. That’s not cautionary language. That’s how resignation is expressed.
Five weeks into a conflict that has already altered the global energy landscape, the top economists at the International Monetary Fund released that precise assessment on Monday. US and Israeli forces attacked Iran on February 28, sparking the start of the conflict.
Key Facts — IMF & The Middle East Conflict
| Field | Details |
|---|---|
| Organization | International Monetary Fund (IMF) |
| Headquarters | Washington, D.C., United States |
| Founded | 1944 (Bretton Woods Conference) |
| Conflict Start Date | February 28, 2025 (US–Israeli strikes on Iran) |
| Strait of Hormuz Traffic | ~20–25% of global oil supply (IEA data) |
| Brent Crude (as of report) | ~$112/barrel — up over 55% since Feb 27, 2025 |
| WTI Crude (as of report) | ~$102/barrel — up over 52% since conflict began |
| IMF Assessment Document | World Economic Outlook — Published April 14, 2025 |
| Key IMF Warning | “All roads lead to higher prices and slower growth” |
| Most At-Risk Groups | Low-income nations; fuel-importing economies in Africa, Asia, Latin America |
The International Energy Agency claims that what transpired—Tehran’s retaliatory strikes throughout the Gulf, the de facto closure of the Strait of Hormuz, and the paralysis of regional supply chains—became the most serious disruption to the world oil market in recorded history.
The price of a barrel of Brent crude is currently close to $112. West Texas Intermediate is currently trading at about $102. Since the beginning of the war, both numbers show an increase of more than 50%. In locations far from the battlefield, those numbers are real and being felt.
Even though no one is yet calling it a crisis, the pressure is already apparent when you walk through a supermarket in Naples, a wholesale market in Karachi, or a port in Lagos. The cost of fuel is rising. Food prices are being impacted by transportation costs. Higher energy costs are simultaneously squeezing production margins and regular household budgets in Asia’s major manufacturing economies, a combination that is very challenging to swiftly resolve.
According to reports, the mood in Europe is similar to that of 2021, when the gas shock that preceded the conflict in Ukraine started subtly unsettling both central banks and governments. Due to their heavy reliance on gas-fired power, nations like the UK and Italy are in a familiar and unwanted situation. Although “insulation” is a relative term when energy markets are this unstable, France and Spain, with their larger nuclear and renewable capacity, have some insulation.
In its more subdued moments, the IMF’s warning is also a warning about an issue that is compounded by other issues. After the COVID years and the 2022 food and energy crisis, many of the economies now experiencing oil-driven inflation had only recently begun to recover. As the Northern Hemisphere planting season gets underway, fertilizer supply chains through the Gulf have been disrupted, posing a threat to harvests throughout the year for low-income countries.
Even though many developed economies have been reducing their development assistance, the IMF specifically noted that these countries might require more external support. It’s difficult to overlook the cruelty in that timing.
The shock was described by the IMF as “global, yet asymmetric,” and this framing is crucial. Elevated prices will benefit oil exporters who are still able to sell their product. However, producers with limited exports, such as a number of Gulf Cooperation Council members whose logistics have been complicated by the conflict that is driving up prices, might not see that upside materialize as it might appear on paper.
In the meantime, energy importers are bearing expenses that are difficult for them to absorb or pass on. This type of divergence strains international cooperation and makes it more difficult to implement coordinated policy responses.
How long this war will last and how far it will spread are still unknown. The IMF presented three rough scenarios, noting that they all contribute to higher inflation in one way or another: a brief, sharp spike; a protracted, grinding conflict; and a murky middle where tensions simmer and markets never quite settle. Both direct and indirect mechanisms are involved. In addition to immediately raising prices, higher energy costs also influence expectations.
Businesses and employees may lock in the very inflation they were attempting to predict if they start to assume that inflation will continue to be high and modify wages and prices accordingly. The IMF cautioned that this feedback loop makes it much more difficult to contain the shock without a major slowdown in the economy. Globally, central banks will be more nervous about the numbers than their public statements are likely to show.
As this develops, it’s hard to ignore the economic catastrophe of 2022, when the world realized, albeit somewhat belatedly, how intricately linked food systems, energy prices, and financial stability had become. At that time, the lesson was not fully understood. On April 14, the IMF will release its World Economic Outlook, which will provide a more comprehensive picture. It could make a big difference whether policymakers interpret it as a warning or just a forecast.